Durable Goods Orders also managed a substantial beat to expectations in April, jumping 3.4%, March was also revised sharply higher as well. This index is often volatile, and one month means little, as it is often skewed by substantial changes in transportation orders as is the case here they surged 65%. Non-defense capital goods orders ex-aircraft, the proxy for business spending, aka CAPEX, fell again down .8% for the month and 5% from a year ago. A 3rd consecutive decline for CAPEX and the 15th decline in the last 18-months. CAPEX spending was also revised significantly lower going back to 2013. Great headline number but weak details, the consistent lack of business spending is particularly troublesome and contradicts the recovery is great theme. As does todays 4th consecutive negative regional Fed index as Kansas City fell a point to -5 in May despite marked improvement in a number of subcomponents.
Indeed, the recent gargantuan beats with respect to new home sales and pending home sales really stand out and in an odd way as significant strength like this just isn’t seen other areas of the economy. That said real estate tends to lead the economy both into and out of recessions, so perhaps the recovery is about to become a lot more real. Will have to wait until June 20th to get confirmation on existing home sales as closing times, escrow etc. put them out of sync with the new and pending sales data.
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